Migros is Switzerland’s largest supermarket chain and one of the 500 largest companies in the world. Known as the big M because of its iconic orange logo, the company employs more than 84,000 people and has recently posted sales of more than $20 billion. Turning 85 years old in 2010, Migros’ unique history, business savvy and far-reaching vision make it a noteworthy case study for brands in and outside the category. Migros has been ahead of its time from its inception, and is a prime example of how a company can diligently build brand capital through innovation, social responsibility, thoughtful portfolio strategy and a careful management of brand voice.
Innovation — No Middleman
Founder Gottlieb Dutweiler first disrupted the grocery experience in 1925 when he put five Ford T delivery vans, converted into mobile stores, on the road. The assortment was limited to six basics – coffee, rice, sugar, pasta, coconut oil and soap. By cutting out the middleman (Migros is an amalgam of the French words mi (semi) and gros (wholesaler)), Duttweiler was able to offer these household staples for 40 percent less than his competitors. Essentially, Duttweiler built a direct bridge from himself, as wholesaler, to the consumer.
Needless to say, Migros received attention not only from the housewives, who loved the concept, but also from less friendly parties like the government, which raised taxes on mobile stores by 500 percent. Yet, Migros turned adversity into a new wave of growth, opening retail locations and manufacturing its own products. Migros primarily sold its own label, a practice it continues today (private labels account for some 95 percent of the group’s sales, and many are manufactured by the company itself).
Social Agenda — Everybody’s Business
However, it was another wave of government pressure on Migros — banning branch store openings — that inspired the company’s ingenious business model. In 1941, the childless Duttweiler converted Migros into a group of nine regional cooperatives, granting customers the ability to acquire membership in the company. The new Migros emerged with 75,000+ paying members and remains “everybody’s business” to this day.
Yet, Duttweiler didn’t stop there. He established the Gottlieb Duttweiler Institut, a research think tank for social and business studies, when social responsibility was far from a business term or concern to most. The institute served as Migros’ own research arm, providing access to thought leadership on social change and concerns. In turn, the company would apply those to product development and new ventures. In 1950 Duttweiler himself composed 15 theses that continue to guide leadership today, including progressive ideas on women’s role in society, the fair distribution of profit and broad access to education and culture. Duttweiler also instituted the “culture percent,” a corporate tithe to support culture and education (in 2008 Migros gave more than $119 million Swiss Francs back to the community). Duttweiler understood social responsibility as leading marketers do today: not as a discreet effort or add-on, but as an integral part of operations.
Portfolio Strategy — Extending Out from Core Strengths
Because of Duttweiler’s sound vision and business savvy, Migros today is an integral part of Switzerland’s social fabric. According to the company, 99% of all Swiss households shop there at least once every year. Given consumers’ familiarity and, in many cases, stake in the company, Migros has permission to expand in ways few brands can. Today, its portfolio includes gas stations, secondary education, fitness parks, banking, insurance and traveling, to name a few. Yet Migros has never lost sight of its core strengths: its grocery business and focus on private labels.
The company, partly thanks to the Gottlieb Duttweiler Institut, understands that its customers no longer merely seek a competitively priced product, but one that intersects with individual lifestyles and beliefs. Therefore, it carefully established a lifestyle-based strategy, building a family of brands ranging from M-Budget (for the budget conscious) to M-Classics (for the traditionalist who wants good quality with no frills) to Migros Selection (for the discerning consumer who is willing to pay a little extra).
Migros has put its orange M to good use in some highly malleable ways. Recently, it introduced the tagline “an M better,” turning the M itself into an ingredient and shortcut at the same time. But the company took the idea a step further and fashioned an entire campaign around Migros’ commitment to price/performance, freshness, regionalism, its Swiss roots, and sustainability. Leveraging the might of its brand assets to the fullest, the resulting campaign is a modern expression of many of Duttweiler’s beliefs, while also addressing current social concerns:
Voice: Irreverent Reverence
Finally, Duttweiler’s spirit and vision is still alive not only in the business model, but also in the words and imagery the company uses when speaking with its customers. Over decades, Migros has carefully nurtured a brand asset many companies continue to overlook: brand voice. While only one of many expressions of voice, the company’s ad campaigns have a cult following in Switzerland and are readily available on YouTube. Whether fluent in German or not, the following TV spots make abundantly clear that whether promoting individual brand family members, whole business areas or the ingredient brand itelf, the broader Migros story unmistakably shines through.
Taken together, Migros is an encouraging example that a business born of a disruptive innovation can continue to innovate and do so boldly, even more
than eight decades later. It also demonstrates that adversity can prove a powerful engine for innovation, both disruptive and incremental. Of particular note, however, is Migros’ early move to integrate the consumer into the business, long before today’s discussion about co-brand management, as well as its ongoing dedication to set and nurture an agenda. Despite its tremendous success, Migros has made mistakes along the way (attempting to enter the French and Turkish market, for example). But the company learns from them and continues to take risks, never losing sight of its core values and business.
strategicOctober 1, 2014
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